Would a licence to occupy constitute parting with possession?

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Produced in partnership with Desmond Kilcoyne
Published on LexisPSL on 13/08/2020

The following Property Disputes Q&A produced in partnership with Desmond Kilcoyne provides comprehensive and up to date legal information covering:

  • Would a licence to occupy constitute parting with possession?

Would a licence to occupy constitute parting with possession?

Both residential and commercial tenancies commonly include an express term or covenant prohibiting ‘parting with possession’ (which often also prohibits assignment and subletting). Breach of such a covenant therefore can have important consequences. For example, in a residential context, it can be a criminal offence to unlawfully part with possession of (or sublet) social housing: see sections 1 and 2 of the Prevention of Social Housing Fraud Act 2013. Equally, commercial tenants who part with possession (or sublet) are liable to forfeiture if a breach of covenant has occurred.

The issue is potentially raised where a tenant lets another person into occupation of the demised premises. In Akici v LR Butlin Ltd, Neuberger LJ (as he then was) observed, at para 23 of the judgment onwards:

‘23. The difference between possession and occupation is rather technical and, even to those experienced in property law, often rather elusive and hard to grasp. None the less, it is very well established and is particularly important, and indeed well known, in the field of landlord and tenant law, especially in relation to the question of whether an agreement creates a tenancy or a licence, and in relation to alienation covenants…

25. …while one cannot lay down any immutable rule as to how a particular word or expression is to be construed in

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